USD/JPY remained stalled just above 106.00 as US and Japanese economic and central bank developments failed to provide direction or incentive for movement. Until there is a change in the fundamental outlook limited technical action and reaction seems to be the solution, according to FXStreet’s analyst Joseph Trevisani.
Key quotes
“Japan’s recovery from the pandemic is hindered by several factors. Global consumption a crucial item in Japan’s export economy has yet to return to pre-virus levels. The fraught US-China relationship while far from a breaking point has inhibited China’s role as an assembly point for foreign parts manufacturers and as the destination for new investment. Finally, the COVID-19 pandemic, now resurgent in Europe as it declines in the US continues to thwart a full-fledged recovery.”
“In the choice to replace Prime Minister Shinzo Abe who is resigning for health reasons, chief cabinet secretary Yoshihide Suga, a long-time Abe confident appears to have the inside track. As he has said he is seeking the post to take over the Prime Minister’s unfinished work, little initial change in policy or goals are expected.”
“The USD/JPY remains dependent on the dollar side of the pair. It is clear that the summer rise in COVID-19 cases in several large states did not reverse the US recovery though it may have slowed it somewhat. The 31.8% plunge in annualized GDP in the COVID-19 quarter has almost entirely reversed in the third according to the Atlanta Fed’s running estimate at 30.8%.”
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